Personal Finance Links - Sept 6

So let’s wrap up another week with some favorites from around the Personal Finance Blogosphere.

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Reasons Why Tracking Net Worth is More Fun and Satisfying than Credit Score

Mr ToughMoneyLove talks about why you track your Net Worth and not your Credit Score. Personally I think this is great adivce. Net Worth tells you how much you actually have. Credit Score tells you how good you are at paying back what you don’t have yet.

One of the points Mr ToughMoneyLove makes is that the number values of Net Worth are better than Credit Score. For instance, with Net Worth you can actually have a negative value. With Credit Score, even a horrible score like 300 doesn’t look so bad when you see it as it’s a positive number and compared to zero, a fairly high one. He also notes that your Credit Score has a maximum number of 850. You can’t have a maximum Net Worth. It can be as high as you make it.

He brings up a lot of other great points to drive home that Net Worth is better than Credit Score. Personally, I’d rather have no Credit Score at all if possible. This would mean I had no debt, but that’s almost impossible these days.

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How to Live in Your Car

Motive Magazine writes 12 tips to living out of your car. I like this mostly for the humor of it. The article talks about how to do things like shower and shave for free and what types of food to buy that keep well in a car.

Anyways, if you are in for a good laugh or more importantly, about to get evicted from your home, it’s an article worth checking out.

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10 things I have learned about money

Peter talks about 10 things he learned while going through David Ramsey’s Financial Peace University at his church. Here’s what he learned:

1. Having Debt is not a good thing
2. To truly succeed with your money, you must have a plan
3. Having money does not mean having happiness
4. Lending money to friends and family is almost always a mistake
5. Giving helps not only the person you’re giving to, but helps you as well
6. No need to worry, God will provide
7. Start saving as early as you can
8. We are only stewards of everything we have
9. “Easy money” almost never actually easy. Get rich quick schemes often don’t make you rich quick
10. Having integrity is more important than having wealth

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When it comes to emergency funds, size does matter

Frugal Dad talks about making sure you have an adequate emergency fund. There are a lot of thoughts regarding emergency funds. I’ve heard people suggest $1000. I’ve heard people suggest 3 months income, 6 months income, or even 1 years worth income. I’ve heard people say a particular months expenses rather than income for an emergency fund.

Frugal Dad recommends using David Ramsey’s financial baby steps by starting out with $1000. Then he recommends the following amounts:

• $500 per spouse
• $500 per child
• $1000 extra for single family incomes

Eventually, he says, the goal is to get to an emergency fund of 6-12 months of living expenses. Also note that things like Cable or Netflix are not considered living expenses as they can easily be cancelled if necessary and can be eliminated from this equation.